Guangdong Clarified Rare Earth Integration Schedule

In June, the website of Guangdong Provincial People’s Government formally promulgated the“Opinion on Promoting the integration in Guangdong Province Rare Earth Industry”,which put forward a schedule for the integration of rare earth resources and rare earth industrial chain in Guangdong Province.Nine government departments including Guangdong Provincial Economic and Information Commission, the Provincial Development and Reform Commission, the Provincial State-owned Assets Supervision and Administration Commission and relevant prefecture-level cities will clarify division of labor, speed up the pace to drive forward integration and optimization of rare earth resources in Guangdong Province.

“The Opinion” clearly put forward the schedule for rare earth integration, by the end of 2013, through market-oriented means such as conglomeration, acquisition, and joint venture, Guangdong Province Rare Earth Industrial Group will finish the integration of existing rare earth dressing, smelting and separation enterprises in Guangdong Province;strengthen Guangdong Rare Earth Group’s cooperation with resource producing regions,develop rational interest sharing mechanism;the construction of key industrial bases such as China South Rare Earth Science and Technology City has made initial progress; rare earth group has basically accomplished collective operation and management of rare earth resources, and become a large rare earth enterprise group with key support from the state government for further development.

By the end of 2015, Guangdong Rare Earth Industrial Group has basically finished the integration of rare earth industry industrial chain inside the province, and established a collective purchase operation mechanism for collective prospecting and mining of rare earth resources and rare earth smelting separation products across the province, the rare earth mining, smelting and application technology standards have been further improved, resource comprehensive utilization rate and environmental protection standard have improved significantly; the construction of rare earth industry base has made evident progress,R&D of rare earth key application technology and industrialization standard have shown significant improvement; the support and safeguard functions of rare earth new materials toward downstream application industries have increased obviously; Guangdong Rare Earth Group has further expanded and consolidated its business to become a world famous rare earth enterprise with core competitiveness.

Guangdong cherished ambitious plan to develop a powerful rare earth group. In 2011,Guangdong specially set up a Provincial Rare Earth Office, and drafted an overall plan for rare earth industry development; in October of the same year, Guangdong Provincial Government submitted “Guangdong Province Large Rare Earth Enterprise Group Organization Program” to the Ministry of Industry and Information Technology, and visited Beijing for a number of times for coordination; on February 27, 2012,Guangdong Province Rare Earth Industrial Group, which relies on Guangsheng Assets Management Co,. Ltd as the main body, was formally established, soon after its setup, it was entrusted with the mission to fully promote the M&A and resource integration in Guangdong’s rare earth industry, and strive to become one of the three major rare earth enterprise groups with support from the state government for focused development.

Furthermore, fulfilling the collective development and management of rare earth resources and collective operation of rare earth mineral production across the whole province in Guangdong will become the highlight of integrating rare earth resources. Guangdong will allocate funds from its financial resources to carry out rare earth resources prospecting inside the province, support Guangdong Province Rare Earth Industrial Group to participate in rare earth prospecting,investment, development and utilization, speed up the pace of finishing the existing rare earth mining right expansion work, apply for exploration right and mining right of newly add rare earth resources.According to the “The Opinion”, during the “Twelfth Five Year Plan” period, excluding M&A and layout optimization projects approved by the state government, Guangdong will prohibit new construction and expansion of rare earth smelting & separation projects, meanwhile it will support Guangdong Province Rare Earth Industrial Group to form joint venture with existing rare earth smelting separation enterprises in the province, in order to bring about the merger and restructuring of rare earth smelting & separation enterprises. Meanwhile,Guangdong Province Rare Earth Industrial Group should adopt means including industrial investment and venture capital investment to promote cooperation between new rare earth material and application enterprises.

“The Opinion” proposed that, while supporting Guangdong Province Rare Earth Industrial Group to properly handle the integration of rare earth industry inside the province, it will actively participate in the integration of rare earth resources and M&A of rare earth enterprises in neighboring provinces and cities. Support the Provincial Rare Earth Industrial Group to speed up the pace of“walking out”, actively acquire overseas rare earth resources and deep processing enterprises, legitimately conduct export of rare earth products, gradually achieve globalized operation, and improve international competitiveness. Apart from financial and land related supporting policies, Guangdong will also support Guangdong Province Rare Earth Industrial Group to promote industry integration and enterprise M&A through equity, cash and equity replacement, and encourage relevant financial institutions to provide financing support in the form of comprehensive credit line and consortium loan to Guangdong Province Rare Earth Industrial Group.

Guangdong is the province in China with the most complete varieties of rare earth resources,which are dominated by heavy rare earth, a very scarce resource in the world. According to estimate, Guangdong’s reserve of various rare earth resources tops 9 million tonnes, the total of ion-type rare earth resource reserve is 525,000 tonnes (REO), ranking top nationwide.At present, Guangdong Province’s annual rare earth mining capacity has approached 3000 tonnes; in 2011 Guangdong rare earth industry recorded 50 billion yuan in output value, and brought about an output value of over 1.5 trillion yuan in the downstream application industry.